At a time when overall divorce rates have dropped, the divorce rate for older couples has doubled over the last few decades. For those in their 50s and 60s, divorce is more common than it has ever been. Often called gray divorce, couples are likely bolstered by financial independence, a lifetime of knowledge and the desire to follow a different path for their future. Additionally, this generation has seen the negative social stigma surrounding divorce greatly diminish.
While the issue does not always split down gender lines, the most common hidden component that causes unexpected trouble in a gray divorce is the use of a financial advisor. Over the course of the marriage, the couple will likely rely on the advice and guidance of a single financial planner to provide insight regarding the best moves to make. From purchasing stock and sinking capital into the family business to setting aside retirement funds, one advisor generally has detailed knowledge of the couple’s finances.
Divorce dramatically changes finances
Unfortunately, the divorce process will completely change the parameters of the couple’s finances. From the division of assets and debts to the division of physical property and retirement funds, the couple must divide one household into two financial futures. It is here, unfortunately, that the hidden challenge becomes apparent.
In general, the financial planner will only represent one of the parties moving forward. While it might not cross the lines of a breach of professional ethics, it is generally considered a conflict of interest for the same advisor to represent both exes. In these situations, one spouse will likely have to find someone new he or she is comfortable with. This can be difficult after working with the same advisor for decades, building toward a common goal. While this might not have a direct impact on the course of the divorce itself, it is a factor that both parties must consider. Learning to trust a new professional with your financial future can be a challenging task.